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KIMLEY‐HORN AND ASSOCIATES, INC.
<br />NOTES TO THE FINANCIAL STATEMENTS
<br />
<br />DECEMBER 31, 2017 AND 2016
<br />(SEE INDEPENDENT ACCOUNTANT’S REVIEW REPORT)
<br />
<br />
<br />15
<br />Note 9—Income taxes (continued)
<br />
<br />The components of deferred income taxes as of December 31, 2017 and 2016 are as follows:
<br />
<br />2017 2016
<br />Deferred tax assets:
<br />Net operating loss and other tax carryforwards -
<br />state and federal 644$ 606$
<br />Temporary differences for reimbursed expenses 199,476 274,206
<br />Post-retirement health benefits 175,455 155,721
<br />Foreign tax credit 91,767 -
<br />Federal research and development tax credit 1,183,237 -
<br />State research and development tax credit 115,136 4,067
<br />Accrual to cash adjustment - 50,834
<br /> Total deferred tax assets 1,765,715 485,434
<br />Deferred tax liabilities:
<br />Accrual to cash adjustment (4,100,888) -
<br />Depreciation (2,705,915) (3,787,921)
<br /> Total deferred tax liabilities (6,806,803) (3,787,921)
<br /> Net deferred tax liabilities (5,041,088)$ (3,302,487)$
<br />
<br />No valuation allowance for deferred tax assets was required as of December 31, 2017 and 2016. Management
<br />believes it is more likely than not that the deferred tax assets will be recovered by future taxable income.
<br />
<br />A reconciliation of the expected income tax expense (benefit) at the parent’s federal statutory rate of 35% and
<br />income tax expense (benefit) for the years ended December 31, 2017 and 2016 is as follows:
<br />
<br />2017 2016
<br />Expected income tax expense at statutory rate 6,615,845$ 5,912,861$
<br />State income taxes, net of federal benefit 676,567 541,276
<br />Research and development tax credit (1,459,541) (1,537,976)
<br />Permanent differences 692,107 (775,805)
<br />Change in uncertain tax positions (437,927) (229,132)
<br />Foreign items (119,953) -
<br />Federal and state rate revaluation (3,856,840) -
<br />Other 3,504 42,646
<br />2,113,762$ 3,953,870$
<br />
<br />As of December 31, 2017, the Company has net operating loss carryforwards for federal and state income tax
<br />purposes of $0 and $15,547, respectively, which are available to offset future federal and state taxable income,
<br />if any, for the next 15 years.
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